Perspectives

Getting Digital Right: Three Focal Points for Achieving Nirvana

2016-12-06

Successful digital transformation requires organizations to make concurrent and orchestrated improvements to the customer experience, process design and operating model.

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“Doing” digital and “being” digitally are two very different things. While almost any organization can do the former, only those that focus on customer experience, process design and a unified (“non-siloed”) operating model can achieve the latter.

By 2018, for example, IDC predicts that one-third of leading companies in virtually every industry will be disrupted if not displaced by digitally superior competitors. Knowing this, two-thirds of leading CEOs have already made digital transformation the center of their focus, according to industry analysts.

Not all digital initiatives yield the desired effect, however. Far too often, many organizations make the mistake of embarking on single-department installations, overlooking the importance of enhancing the customer experience, and ultimately failing to change their cultural mindset, behavior and operations.

Transformation-minded organizations must consider the following three non-technology concerns to succeed with their aspirations.

1. Focus on Customer Experience

Figure 1

Research shows that nearly 89% of customers will walk away from a company with which they have considered doing business after just one poor customer experience. The business impact can be significant — as much as 20% of revenue. This is why organizations often turn to digital with the goal of improving customer service, enhancing customer experience and increasing customer flexibility.

One focal area is fixing disconnects between channels to align information on inventory, customer data and service commitments. For example, a fast food restaurant might launch an application that allows customers to place a remote order, but because its menus and availability are not synchronized, the restaurant might not be able to fulfill orders, resulting in delays, cancellations and extreme customer dissatisfaction.

Digital initiatives must focus on providing seamless experiences. Truly digital organizations can further enable this by allowing customers to participate throughout the digital journey. (For more on this topic, please read “Making Digital Real and Rewarding.”)

2. Emphasize Process Design

Figure 2

A digital front-end cannot be effective with sub-optimal processes at its core. In other words, a pig in lipstick is still a pig. We recently helped a large financial services company headquartered in Asia to launch an online ordering system. The completed front-end system couldn’t keep up, however, because employees printed orders and then manually entered the information into multiple fulfillment applications.

In another case, we were approached by an energy utility that had built a website to enable customers to view usage data and request additional services. But the time it took to fulfill change requests didn’t align with actual service commitments and customer expectations, resulting in customer frustration.

While these mistakes may seem obvious, recognizing them is much harder to do when operating as a single cog in a much larger machine. Hence, it’s critical to study the impact of digital on business processes and redesign them to ensure acceptable delivery with the help of performance-indicating analytics.

3. Redefine the Operating Model

Figure 3

As processes change, so too must operations. Otherwise, the digital initiative will not achieve its goals. In one case, a financial service company re-routed incoming customer calls multiple times, leading to widespread dissatisfaction because it had not trained individual departments on shared services. In another case, a travel company with whom we recently worked made its products available online, but struggled as many in the organization still considered offline travel agents as their bread and butter. To make matters worse, neither the products offered nor the systems in place to fulfill them were digital-friendly.

When digital initiatives are conducted in silos without corresponding changes in the operating model, they cannot achieve their potential — either in terms of improving the customer experience or in realizing a significant return on digital investments.

Looking Forward

A digital initiative that ventures beyond the technology lens and focuses on customer experience, process design and a unified operating model will realize success. Thus, organizations should consider the following when embarking on a digital journey:

View each digital initiative not as a mere technology intervention, but as a holistic change that touches the entire value chain.

Regard end users as partners on the digital journey and involve them in ideation, evaluation, design and delivery.

Design versatile processes that can adapt and reinvent as customer preferences and business models change.

Design operating models that enable cross-functional interaction to provide the best customer experience.

Create an open, innovative environment by cross-skilling and upskilling employees and allowing them to own and drive digital transformation.